References (18)


Citations (1)



Any Regulation of Risk Increases Risk

Philip Maymin

Vantage Sports

Zakhar Maymin


April 20, 2012

Financial Markets and Portfolio Management, Forthcoming

We show that any objective risk measurement algorithm mandated by central banks for regulated financial entities will result in more risk being taken on by those financial entities than would otherwise be the case. Furthermore, the risks taken on by the regulated financial entities are far more systemically concentrated than they would have been otherwise, making the entire financial system more fragile. This result leaves three directions for the future of financial regulation: continue regulating by enforcing risk measurement algorithms at the cost of occasional severe crises, regulate more severely and subjectively by fully nationalizing all financial entities, or abolish all central banking regulations including deposit insurance to let risk be determined by the entities themselves and, ultimately, by their depositors through voluntary market transactions rather than by the taxpayers through enforced government participation.

Number of Pages in PDF File: 25

Keywords: regulation, crisis, portfolio management, value-at-risk, risk

JEL Classification: G18, G21, G28, G38

Open PDF in Browser Download This Paper

Date posted: April 11, 2010 ; Last revised: April 22, 2012

Suggested Citation

Maymin, Philip and Maymin, Zakhar, Any Regulation of Risk Increases Risk (April 20, 2012). Financial Markets and Portfolio Management, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1587043 or http://dx.doi.org/10.2139/ssrn.1587043

Contact Information

Philip Maymin (Contact Author)
Vantage Sports ( email )
United States
Zakhar Maymin
Independent ( email )
Feedback to SSRN

Paper statistics
Abstract Views: 3,092
Downloads: 500
Download Rank: 36,173
References:  18
Citations:  1

© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.578 seconds